Question: The PSLRA requires auditors to report to the SEC illegal acts that would have a material effect on a clients financial statements, assuming client management

The PSLRA requires auditors to report to the SEC illegal acts “that would have a material effect” on a client’s financial statements, assuming client management refuses to do so. Briefly describe three hypothetical situations involving potential illegal acts discovered by auditors. Indicate whether the auditors involved in these situations should insist that client management report the given item to the SEC. Defend your decision for each item.

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Section 10A Audit Requirements of the Securities Exchange Act of 1934 discusses auditors responsibilities for investigating and reporting illegal acts ... View full answer

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